Ever since the RBA said they were paying special attention to employment figures when determining future rate policy, the jobless numbers in Australia have become more relevant to the markets.
A consensus still hasn’t formed around when we could expect the next rate cut. And we still are waiting to see how much of an effect the precipitous fall in rates this year has had.
For a while now, Australia’s unemployment rate has been high in comparison to other countries, but within the range that most economists agree is structural.
Wages have been growing steadily and above the inflation rate. Yet policymakers are still trying to bring the rate down further.
Consensus of Expectations
The headline figure for the market is Employment Change. Expectations are for this to come in at +31.5K, compared to 34.7K jobs added in August. Although a little less, it’s still at the top of what has become something of a normal range between +10K and +40K. We could expect a stronger market move if the results were outside of those points.
Projections indicate that the Unemployment rate will stay the same as last month, at 5.3%. Even without a change, it would still be a continuation of the upward trend in the number of jobseekers that has consolidated since bottoming out in March.
Of course this the middle of Australia’s winter, when temporary work is at a low ebb.
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The Smaller Data
As a matter of reference, we want to keep an eye on the participation rate.
Expectations are for this to tick up to 66.3% from 66.2% in the prior month. Even if job creation remains healthy, we can still have rising unemployment as more people join the workforce. This appears to be the case for Australia, which has a consistent increase in participation since March.
The question is whether more people are joining because they are being enticed by higher wages (positive for the economy), or whether people who have left the workforce are returning because they are having trouble making ends meet (negative for the economy).
At the same time as the employment data, we get the Quarterly NAB Business Confidence survey. Generally, it doesn’t move the currency directly but is useful for trend traders.
Expectations are for business confidence to improve to 26 from 6. This would be a major improvement, bringing it back to levels not seen since early 2018, back when it appeared, Australia’s economy was doing great. This was before the effects of the trade war.
Going Forward
This is the last of the major data out of Australia for the week. But, there could still be some substantial volatility on Friday, when we get a deluge of Chinese data, including GDP, unemployment and Industrial Production.
The markets remained unimpressed with the tentative agreement between China and the US. It’s not like we haven’t had some “first step” agreement before.
Unless there is a major surprise in the employment data and China’s GDP on Friday, there doesn’t seem to be much to suggest the AUD will break out of the descending channel it has been stuck in all year.
And the RBA would likely keep the pressure on, as we wait for the next rate cut.
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